Friday, March 30th, 2012
In a world of ever changing economic transactions, it’s becoming increasingly more difficult to keep up with all of the new and various business tax compliance and reporting demands. So how do you reduce your company’s potential risk for noncompliance and manage its income tax liabilities?
- Be aware of your company’s major compliance and reporting requirements. This is best achieved by ensuring that your accountant understands your business and is kept informed about any new developments in the services or products your company offers.
- Keep your accountant informed of any international operations or transactions. There are many tax saving strategies for companies with subsidiaries and other business connections located internationally.
- For multi-state companies, ensure that your accountant is aware of your operations in the various states. Inform them if your company has any employees, tangible personal property, inventory or offices in multiple states. Furthermore, ensure that your accountant is aware of your sales tax obligations as this is becoming an area of increased audits by the state departments of revenue.
- Consult with your accountant before corresponding with the federal or state revenue departments directly. Many states have begun to “fish” for information by mailing questionnaires to company’s inquiring about its operations in their state. The wording in these questionnaires can be tricky, therefore, forward them to your accountant for guidance on how to respond.
- Ensure that your accountant is constantly monitoring the latest tax developments. Make it a regular practice to monitor your accountant’s website for any new or changing tax laws and regulations.
- If you are not in constant communication with your accountant, I highly recommend that you engage in year-end tax planning with your accountant during the last 3 months of the company’s calendar or fiscal year. This is the time in which you can get in some great tax savings ideas.
- Owners should openly communicate with their accountants to keep them abreast of any significant business transactions. These transactions can have a major impact on your tax liability. Therefore, speak with your accountant before restructuring your business, beginning operations in a new state or foreign county, changing your company’s ownership structure and so on.
Overall, everyone, including your accountant, is interested in keeping your company in compliance and limiting its federal and state income tax liabilities. Therefore, communicating with your accountant to ensure that they understand your business and keeping them engaged in your business transactions throughout the year is the most effective way to manage your company’s reporting responsibilities and current and future tax liabilities.
Written by: Alacia Wilson